The public backlash against the actions of some banks is palpable. People are outraged at the executive bonuses paid by AIG, Bank of America/Merrill Lynch and Fannie Mae. These companies are bankrupt save for the hundreds of billions of taxpayer money that is being poured into them. How can companies pay performance bonuses to the very people who ran their companies and our economy into the ground?
It is not that Americans are against performance bonuses. The country was built on the belief that if you work hard you can get ahead. People start businesses to earn more than a paycheck. The rub for most of us is that these corrupt banks make large political contribution to their crony congressmen then receive huge taxpayer bailouts in return. The rest of us have to make it on our own, without help from our government and in many cases the government impedes our progress. The opposite of progress is congress.
The public backlash goes further than the ill gotten bonuses. The country’s economic engine was built by entrepreneurs and these small businesses supply more than half of all American jobs. The backlash comes from the way banks have treated small businesses and entrepreneurs. Small businesses and start up companies find that they cannot get financing through their traditional banks and are forced to access capital in other ways. To complicate matters, the lines of credit that small businesses do have, have been cut by the very banks that are being bailed out and that are supposed to be lending.
People are tired of hearing that “we must” bailout these huge companies to save the entire system, the systemic risk argument. These bailouts come at the detriment to everyone else and when we ask congress to stop companies from becoming too big to fail, we are told “government doesn’t want to get involved in free markets.”
The way our government has handled company bailouts makes me wonder just who our government is working for. I say, that we stop all bailouts for companies and instead balance our budget, lower the tax burden on the middle class, reduce unnecessary spending and get our fiscal house in order. If large or small companies fail it is because of a poor business model and they should not be propped up with good taxpayer money.